US open: Dow falls 160 points following disappointing ADP report

US stocks declined on Wednesday as investors digested a disappointing ADP employment report, while oil prices climbed slightly.

Just after 10:00 in New York, the Dow Jones Industrial Average was down 0.92%, while the S&P 500 and the Nasdaq slid 0.18% and 0.07% respectively.

The ADP report, widely seen a precursor to the monthly nonfarm payrolls report showed the US economy added 189,000 in March, short of market forecasts.

Economists had predicted that 225,000 jobs were created last month, up from 212,000 in February.

“We view the 25,000 deceleration in March ADP employment growth as consistent with our forecast for a 245,000 rise in private payrolls in Friday’s employment report from the Labor Department,” Barclays analysts said in a note.

As such, the US labour market’s recovery was in question on Wednesday as investors worried the recent strength could soon diminish, as attention switches to the official non-farm release on Friday which economists forecast will show 245,000 positions were created in March.

“At some point the average monthly gain in payrolls is going to drop back towards 200,000,” said Capital Economics’ chief US economist Paul Ashworth.

“This will be heralded as a disastrous collapse by some, but it won't be anything of the sort.

“The gains of nearer 300,000 per month that we've seen over the past six months are simply unsustainable.”

Eyes turned to the Institute for Supply Management’s manufacturing index for March will be released, which is expected to have slipped to 52.5% from 52.9% in February.

Meanwhile, San Francisco Fed President John Williams and Atlanta Fed chief Dennis Lockhart, both voting members of the Federal Open Market Committee, are set to give talks at different events.

In company news, shares of Hewlett-Packard climbed 1.16% after Jefferies lifted the computer maker to buy, saying it sees “significant longer-term value” not reflected in the current valuation.

Twitter 2.34% rose after Jeffries initiated coverage on the stock with a ‘buy’ rating, while office supplier Staples climbed 0.71% after KeyBanc Capital lifted the company to ‘overweight’.

Biopharmaceutical group Sarepta Therapeutics gained 6.89% after the group unveiled Edward Kaye as its interim chief executive with immediate effect.

Oil prices edged forward but remained under pressure as negotiations over Iran’s nuclear programme continued in Switzerland after the deadline was extended.

West Texas Intermediate gained 0.77% to $47.97 a barrel, while Brent crude rose 0.85% to $55.58 a barrel.